Your firm needs to borrow $1.0 million for one year. The firm has no other short term borrowings and it's combined state and federal tax rate is 25%. Your banker offers several lending alternatives. Which one will you choose?

Select one:

a.

8.00% simple interest with a 15.00% compensating balance

b.

11.00% discount interest

c.

7.00% simple interest with a 20% compensating balance

d.

10.00% simple interest